Senator Eliot Shapleigh - El Paso, Texas

But state will try to hold contractor accountable after troubles in benefits enrollment system.

The state plans to hold a contractor financially accountable for problems with implementing its system to sign up Texans for public assistance but probably doesn't have grounds to cancel the contract, the Health and Human Services Commission's top lawyer said Monday.

Steve Aragon's comments came the week after a bipartisan group of 60 state representatives called on officials to cancel the contract with a private group headed by Accenture LLP.

"Termination is always a pretty severe remedy, and it's the one that you would hope to invoke as a very last resort," Aragon, who is preparing recommendations for Executive Commissioner Albert Hawkins, said in an interview.

"I can't say that I've seen anything that represents something that in my opinion would require termination of the contract for cause."

But critics continued to call for firing the group. The contract was originally valued at $899 million over five years; that has dropped to about $849 million, state officials said. The state has paid about $103 million so far.

"It doesn't take a very detailed or legal analysis to see that Accenture has not delivered on what they said they were going to deliver," said Mike Gross, vice president of the 12,000-member Texas State Employees Union, which includes workers who have lost jobs in the outsourcing.

After the private group, formally known as Texas Access Alliance, launched the pilot version of its enrollment system in Travis and Hays counties in January, applicants for Medicaid, food stamps and welfare experienced long hold times and spoke with call center operators who couldn't answer their questions. Hawkins has delayed the statewide rollout of the system, which replaces some enrollment offices with call centers, until problems with training and technology are addressed.

The commission also is paying $1,800 retention bonuses to 1,000 state workers.

In addition to enrolling Texans in public assistance, the contract includes two other components: a program to help public assistance recipients choose health plans, and the management of the computer system that runs the enrollment. Accenture won the contract over IBM Corp., which sued the state in March 2005 but withdrew the lawsuit four months later.

Aragon said the enrollment system's problems are "definitely a disappointment." He said Accenture seems to have "underestimated the level of technical knowledge" its employees would need but has made significant improvements.

"Our objective is to try to ensure that the vendor is adequately motivated to improve performance, and I believe they are," he said. "And I believe they recognize that there's liable to be a reckoning on the issue of potential damages."

Jill Angelo, a spokeswoman for Texas Access Alliance, said: "It would not be appropriate for us to speculate on cancellation or potential damages. We continue to work with the state to make changes to improve the system, and we are seeing results from those changes."

Hawkins said the contract has provisions that protect the state.

"We will take appropriate action under the contract to enforce requirements and protect the interests of the state," he said.

State officials couldn't immediately put a price tag on unexpected costs the state has incurred because of the enrollment system's problems. They plan to negotiate reductions in some of the fees paid to the contractor, Aragon said.

When a call center representative screens an applicant for public assistance, for example, the state pays a fee, about 2 cents.

State officials originally estimated they'd save $646 million over five years through outsourcing. They don't have an updated estimate, but Aragon said he is confident there will be some savings.

Commission spokeswoman Stephanie Goodman said that despite the problems, Texas' 3 million public assistance recipients will have more options under the new system, which allows them to apply for programs via fax, Internet, mail or in person, instead of just in person.

But Democratic state Rep. Eddie Rodriguez of Austin, who signed the letter calling on the state to cancel the contract, said the old system was more effective.

If the state doesn't cancel the contract, "we're just going to continue to not really help people who need the help," he said.